NZD/USD is expected to trade in a consolidative theme between 0.7160 and 0.7320 in the next weeks, noted UOB Group’s FX Strategists.
24-hour view: “Our expectation for NZD to ‘trade at a higher range of 0.7200/0.7255’ was incorrect as it dropped to an overnight low of 0.7167 (high has been 0.7239). The decline appears to be running ahead of itself and NZD is unlikely to weaken further. For today, NZD is likely to trade sideways between 0.7160 and 0.7220.”
Next 1-3 weeks: “We highlighted yesterday (13 Jan, spot at 0.7225) that ‘downward pressure has more or less dissipated’ and we expected NZD to ‘trade between 0.7160 and 0.7320 for a period of time’. The rapid manner by which NZD approaches the bottom of the range came as a surprise (overnight low of 0.7167). While there is no change in our view for now, a daily closing below 0.7160 would indicate that NZD could move lower to 0.7130, possibly as low as 0.7080. At this stage, the prospect for such a scenario is not high.”